The proposal submitted last week by Netwealth would see the group acquire all of the issued shares in Praemium, representing an equity value of $785 million.
The proposed transaction offered Praemium shareholders one new Netwealth share for every 11.96 Praemium share, representing a 29 per cent premium for shareholders.
On Tuesday, Praemium confirmed that the board “unanimously concluded that the proposal undervalues Praemium’s business and is not in the interest of Praemium shareholders”.
The board has unanimously decided that the proposal does not appropriately value the company’s current performance and near-term trajectory, as well as its market position, nor does it reflect the valuation upside for shareholders.
Netwealth believes the merger would enhance its platform and accelerate the development of its capabilities to capitalise on the expanding wealth management services market.
Netwealth’s joint managing director Matt Heine said the merger would create a strong value proposition for existing and future clients and shareholders of both groups.
“The proposed transaction would ensure that the combined group can continue to lead the industry in net funds flow, technology and client service in what is currently a competitive and rapidly changing platform and advice landscape,” he said.
“Praemium shareholders would have meaningful equity in the combined group and benefit alongside Netwealth shareholders from the strategic benefits as well as the cost and revenue synergies that would arise from the merger.”